Energy crises arrive faster than policy can adapt. Climate shocks, geopolitical disruptions, infrastructure failures, and fuel supply disruptions are increasing the likelihood of acute electricity-scarcity events across many countries. In these situations, policymakers may need mechanisms to rapidly reduce demand while preserving access to essential electricity services.

Ukraine – living through the systematic destruction of its electricity infrastructure (see e.g. Djankov and Blinov 2022) – has spent years managing acute power scarcity in real time. The closure of the Strait of Hormuz has further disrupted oil/LNG flows and electricity markets in Europe and across the world (Marmarelis 2026), making future scarcity events even more likely.

We present an approach to rationing electricity that both improves on the tools that Ukraine has deployed and offer a template for how European policymakers should prepare for emergency scarcity conditions.

The case against rolling blackouts

Ukraine’s grid operators have primarily relied on rotational outages: disconnecting entire neighbourhoods for extended periods, often 8 to 16 hours (see Figure 1), followed by windows of unrestricted supply. This approach is simple to administer but very inefficient as an instrument of demand management.

Figure 1 Distribution of blackouts before and after the Russian attack on 8 November 2026

Source: Green Deal Ukraina (2025).

The core problem is that electricity consumption is not uniform in its value. The first kilowatt-hours a household draws – for lighting, refrigeration, medical devices, and communications – carry enormous welfare weight relative to their quantity. The marginal kilowatt-hours running a water heater or a dishwasher at full power are worth considerably less. A complete cut-off eliminates both categories simultaneously, imposing maximum welfare cost per unit of aggregate savings.

The distributional consequences compound the efficiency problem. Households that can afford backup generators or battery systems ride out blackouts with minimal disruption. Those who cannot – almost surely disproportionately lower-income households – absorb the full welfare loss. In effect, the blackout schedule functions as a regressive tax on those least equipped to self-insure against supply disruption.

A better tool: Load limiting

Our recent policy brief (Deryugina et al. 2026), building on Reguant and Wagner (2025), points to a more efficient alternative: load limiting via smart meters. Rather than severing supply entirely, meters constrain the maximum power a household can draw at any moment – say, 0.25 kilowatts continuously, with a two-hour daily ‘boost’ window to run larger appliances. Lights remain on. Refrigerators keep running. Phones charge. Medical equipment continues to operate. What disappears, outside the boost window, is the ability to run energy-intensive appliances.

Crucially, load-limiting savings can be calibrated to match rolling-blackout savings in aggregate, but with much better welfare outcomes. Electricity consumption follows a heavy-tailed distribution: a small share of households accounts for a disproportionate fraction of peak demand. A uniform power cap directs its force at this high-consumption tail while barely affecting more modest users. We show that power limits can generate substantial savings while affecting relatively fewer households and keeping the lights on (Reguant and Wagner 2025).

Industrial users require a distinct approach. Many production processes have minimum power thresholds below which equipment cannot function or risks damage. Administrative quantity limits are impractical – they demand firm-by-firm engineering assessments under conditions where speed matters most. The better mechanisms are price-based: real-time tariffs that rise sharply during grid stress, or interruptibility contracts under which firms pre-commit to curtailment in exchange for compensation. Firms with scheduling flexibility respond to price signals; those that cannot adjust pay the true scarcity cost and continue operating. Such an approach also strengthens private incentives for cost-effective investment in on-site generation and storage.

Ukraine’s infrastructure gap and how to close it

The binding constraint in Ukraine is not the design of the policy but the hardware to implement it. Smart-meter penetration stands at roughly 20%, and the majority of installed meters lack remote load-limiting capability. This is a genuine short-run constraint but not an argument against the approach, and not a barrier to meaningful partial progress. Every building equipped with load-limiting meters reduces aggregate demand, shortening outages for the customers remaining on the same feeders. High-density urban areas and apartment blocks – where advanced meters already have some foothold and where demand savings per connection are largest – are the natural priority.

More importantly, emergency conditions change the investment calculus. Smart metering infrastructure has historically been justified on efficiency grounds, with payback periods measured in years. Under acute scarcity, the welfare gains – sustained economic activity, medical safety, reduced social dislocation from prolonged darkness – are front-loaded and large. France and Spain each deployed tens of millions of advanced meters within a few years once the political commitment existed. Ukraine should treat metering upgrades as a wartime/reconstruction priority, financed through international donor and post-war recovery programmes, not as a long-run efficiency project with a normal capital planning horizon.

Ukraine’s population has borne an enormous cost from Russia’s deliberate campaign against civilian infrastructure. Adopting mechanisms that preserve basic access while concentrating reductions where they are most absorbable can alleviate some of the hardship.

The European dimension

Ukraine’s crisis is extreme in its origins but not in its nature. The underlying problem – acute electricity scarcity requiring coordinated demand reduction – is one that European grid operators increasingly recognise as a plausible scenario for themselves. In the current context, a sustained disruption feeds directly into gas-fired generation and, ultimately, into electricity markets across Europe (Goldman Sachs 2026).

The EU is, in one important respect, far better positioned than Ukraine: smart-meter penetration exceeds 80% in several member states, and the EU Electricity Directive has driven continued rollout across the bloc. The infrastructure capable of implementing load limiting at scale already exists in countries such as France and Spain. What most countries lack are pre-committed protocols – technically specified, legally authorised, and administratively tested – that can be activated when grid conditions require it. Designing a rationing mechanism during an emergency is far more difficult than activating a pre-designed one.

European transmission and distribution system operators should treat load-limiting frameworks as standard emergency preparedness, not a future-state ambition. The work involved is not primarily technical; existing smart meter infrastructure can support it. It is institutional: specifying household power caps calibrated to different scarcity scenarios, establishing the legal basis for activation, defining the role of regulators and distribution system operators, and stress-testing the protocols through exercises before an actual event requires them.

European policymakers should take lessons from Ukraine seriously. The next energy emergency may arrive through a geopolitical shock, extreme weather straining demand, or a rapid drawdown of storage reserves. The question of how to ration what remains does not have a good improvised answer. Ukraine has run the experiment under the hardest possible conditions. But the broader lesson extends beyond wartime scarcity: electricity systems increasingly need explicit shortage-management protocols that preserve basic access while reducing demand efficiently. The protocol Europe needs is not the one it designs under pressure – it is the one it designs now.

References

Deryugina, T, Y Gorodnichenko, and M Reguant (2026), “Managing electricity scarcity in Ukraine: From rolling blackouts to load limiting”, Economists for Ukraine Policy Brief #2.

Djankov, S, and O Blinov (2022), “The economic toll of attacks on Ukraine’s power grid”, VoxEU.org, 21 December.

Goldman Sachs (2026), “The energy crunch could accelerate Europe’s shift to electrification”, 5 May.

Green Deal Ukraina (2025), Figure of the week.

Marmarelis, Z (2026), “Strait of Hormuz energy crisis shows EU’s carbon pricing is right approach”, Chatham House, 20 April.

Reguant, M, and M Wagner (2025), “Smart power limits: Designing shortage mechanisms for extreme events”, NBER Working Paper.